Statutory Basis for Appointing a Receiver in Federal Court

The Federal Rules of Civil Procedure outline statutes which also regulate the appointment and duties of a receiver in federal courts across the country.  Rule 66 states that “The practice in the administration of estates by receivers or by other similar officers appointed by the court shall be in accordance with the practice heretofore followed in the courts of the United States or as provided in rules promulgated by the district courts.”

Other federal regulation of appointed receivers is evident in the United States Code, which governs court procedures.  Title 28, Section 959 states that “Trustees, receivers or managers of any property, including debtors in possession, may be sued, without leave of the court appointing them, with respect to any of their acts or transactions in carrying on business connected with such property.”  So, if a court determines an appointed receiver was fraudulent or negligent in their duties of maintaining real property, they could face litigation themselves.

The conduct of a receiver when overseeing receivership property located in a district other than that of the court that appointed them is discussed in Title 28 Section 754 of the United States Code.

One important distinction between the federal court system and the State of California’s is that federal courts rely on decisional law, or the reported usages of the property in question.  California courts rely upon statutes to determine in which cases and at what capacity a receiver should or may be appointed.

Depending upon whether the case is presented in a federal district court or a court of the state and locality, this will determine which rules will govern the appointment of the receiver.  Divorces and real estate issues will most likely be determined in the local courts, but federal violations such as tax evasion or fraud will likely be presented to a federal court of law.

Federal law also allows for federal agencies and commissions to ask the court for an appointed receiver to help them perform their regular duties, much like the agencies in the State of California.  Some of these agencies may use receivers as a form of injunctive relief, to simply enforce a court’s decision or order – this is commonly achieved in the federal court system, allowing these agencies to pursue additional cases versus regulating those which have been determined already.  Others, like the Securities and Exchange Commission, could use a receiver to control a party or business which is violating securities laws. 

 

 

 



Repossession